eBooks: Are eBooks Commodities? Redux

Followers of this blog read a recent post, eBooks: Has Amazon Turned eBooks into Commodities?, and probably groaned at the sacrilegious point of view while frantically shaking their heads "no, neither ebooks nor books are commodities." The argument regarding the commoditization of books is an "old" one for me. A few years ago, Jack Lyon and Rich Adin made presentations at a Communication Central conference in Rochester, NY and drove to Poughkeepsie, NY together -- a 4.5-hour drive. On that drive, this was one of the weighty matters we discussed. Jack was adamant that books are not commodities.

Rich Adin used to think the same, but books, particularly fiction books, have gone the way of athletes and soda pop and become commodities. (By the way, if you haven't seen the movie Moneyball, starring Jonah Hill and Brad Pitt, which is the story of a major league baseball team coming to the realization that with free agency, baseball players are now commodities, I highly recommend you see it. A true story that is well done as a movie.) What follows is Jack's response to Rich's commoditization view.

Jack: I hate the whole corporate mindset that treats books as “product”—just a homogenous mass of words and pages. It’s like marketing dish soap.

Rich: That’s how books should be marketed.

Jack: What?!

Rich: Yep. Just like dish soap. How else would you do it?

I never did come up with a good answer to that question. Finally, I admitted that Rich was right—but I didn’t like it then, and I still don’t!

Let’s go back about 30 years to my first job as editor at a trade publishing house. I really admired the company president, who held not an MBA but a Ph.D. in English literature. Here was an executive who actually cared about books! In a speech to employees, I heard him say this:

“I love the opportunity we have to share what we do with others, to be able to face a customer and honestly say, ‘I love what I’m doing, and I can share something with you that can change your life forever. I can give you a friend that will never, ever leave you.’…It was at least ten years ago that I heard Charles Scribner say, ‘If books become obsolete, I will make candles.’ He didn’t explain his remark, but I think he had in mind that although the electric light has made candles obsolete, candlemaking today is a $100 million industry—not large, but it casts a lovely light, and, after all, books are candles.”

Shortly after that speech, the chairman of the board assigned the president a new position—as CEO of a department store. This man who loved books so much ended up selling kitchen appliances and underwear.

I see the commoditization of books as being analogous to the commoditization of everything else, including people. We no longer have personnel departments; instead, we have human resources. We no longer have leaders who understand a particular industry; instead, we have MBAs who are cranked out like sausages to manage corporations in any industry. With our narrow focus on the bottom line, we’ve ripped the heart out of our businesses—at least, those that used to have one.

So are books commodities, like dish soap? To some degree, yes. As Rich points out, if I can’t get my horror fix from Stephen King, I can easily turn to Dean Koontz. Their books are what economists call “substitute goods.”

If I can’t get Coca-Cola, I’m happy to drink Pepsi (although that’s not true of dedicated Coke drinkers like Rich). If I can’t use Dawn on my dishes, I’m happy to use Dove. Advertisers are aware of this, which is why they spend so much money promoting Coke over Pepsi (and vice versa). Other than the emotional appeal used in marketing, there’s not a lot of difference between one substitute good and another.

The same is true of many genre books, like romance, westerns, and science fiction. I’m usually just as happy to read Orson Scott Card as I am to read Gene Wolfe. But there are exceptions. To me, Wolfe’s There Are Doors is more than just your everyday science-fiction entertainment. Philip K. Dick’s Do Androids Dream of Electric Sheep speaks to me on a level that few other books attain.

Jack's argument is less that books aren't commodities than it is that some books rise above the level of being a commodity. But in the case of fiction, especially bestseller fiction of today, I still think books are substitutable. If they weren't, what would I read in my favorite genres as I wait for the next book by a favorite author to become available? And what happens when that favorite author stops writing? Do I suddenly stop reading?

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The debate arises because the publisher see each book as a unique project, which it is *for them*, but consumers see each book as “just another story”, which it is *for them*.

In the past, the publishers controlled what got to market so they were able to enforce their view. In the ebook era we live in, publisher’s *can’t* control what gets to market so *consumers* enforce their view.

Welcome to the age of “The Golden Rule”; “Them that have the gold, rule.” Next up, the age of “Sturgeon’s Rule”; “90% of everything is crap”.

I have been making the same point to my library colleagues for the past few years. An ebook is a file, and as a nonphysical object lacks all the requirements to move beyond a commodity. The simple illustration I use to make this point (after my audience usually gasps and recoils in horror) is, “Do you really see yourself handing your flashdrive to your grandchildren and fondly reminiscing over all the memories and good times those ebooks represent? Do you think your grandchildren will care?

Unlike music culture which is more deeply connected to the artist and the actual content itself, book culture has deep roots in the physical object and its ability to communicate, connect, and create a sense of place.

Ebooks are a commodity, because we just dont care about the file anymore than we care about our music files. Hell, we dont even know which one is the original file or the copy. I love old books because they are a connection to other human beings. Ebook files are just pieces of data.

eBooks are just another way to encapsulate and distribute a narrative of one form or another. What the consumer buys is the *experience* that the narrative brings. Ditto for other digital media; audio and video.

In the EU, they tax eBooks as a service, not as a product, and they aren’t exactly wrong. Where they are wrong is in the rate they apply, because ebooks can substitute for print books and applying a different rate is anti-consumer.

If we go far back enough in history, the very first stories were delivered directly from creator to audience, and only later did we learn to encapsulate those narratives in physical objects to facilitate their preservation and distribution. Along the way, many people lost sight that the core product is the narrative, not the encapsulation.

The product has *always* been the experience, not the dead tree pulp. (Smell fetishists and object d’art collectors, aside.) 😉

“The product has *always* been the experience, not the dead tree pulp.”

Agreed.

Of course books are a commodity, otherwise people would only like one author, assuming that the author wrote exactly the same over time. But authors change over time, if they don’t, people get bored because they write the same old thing. People’s reading habits change as well. What and who you liked when you were young are probably not the same as what and who you like now. And most people like many authors within a genre as well and several genres.

One of the great things about ebooks is that you can be exposed to so many more different authors, styles, and mixed genres now that there are no gatekeepers. If you like paranormal/thriller/romance/horror, there’s probably a book out there for you. The same thing has happened with music.

Just like when the mass-produced paperback made books affordable for the general public, this change is also lowering the overall price of a book, which opens up books to many people who couldn’t afford them before. eReaders are now cheap enough that they’re not really a barrier anymore. For the $79 for a Kindle, you can get around 2.5 hardback books, well worth the price when there are so many ebooks for free or $2.99 or less. My average price per ebook is currently about $.65.

The market is confusing right now with all the change, but freeing books from the gatekeepers is a good thing.

I’m afraid you are all confused. At the core of the idea of a commodity is the ability to deliver a set quantity of goods at a set price to everyone in the marketplace because there is an agreed upon measurable benchmark quality. Oil is a commodity because you can measure the difference between the barrel you are selling and West Texas Intermediate or Brent Crude (you need to know how dense it is and how much sulfer is in it). I will believe books are a commodity when I can buy a futures contract based on the price of 50,000 words of James Patterson and any writer in the world can deliver on that contract providing the same value as Patterson. Spoiler alert: Ain’t gonna happen.

In the real world context of this particular debate, commodity is used the same way it is used in the PC and TV industry; products from multiple sources that are interchangeable enough that price is the primary factor that determines which the consumer buys. PC commoditization is why IBM got out of the business and why HP wishes it could; no matter how they try to differentiate their products consumers still see them as essentially the same as competitors’ generic products.

Note that in neither articles on the subject is anybody arguing that *all* books and *all* authors are interchangeable. The debate is more nuanced than that.

The proposition first brought up by Mr Adin is that *consumers* are voting with their wallets as if *most* (but not all) the books in a particular genre are fungible. That if the price of a book that catches their eye is not acceptable, they don’t go away empty-handed to wait until they can afford it, but rather they shrug and go buy another comparable book.

The point is that, just as many consumers will buy their gasoline wherever the price is lowest in their area, so will many romance readers (or SF or mystery fans) base which book they buy at a specific point to a large extent on price. Commodities trading by monied powers factors into neither purchase.

Also, bringing up a franchise author like Patterson in this debate is about as relevant as bringing up Mercedes or Lexus in a debate about the current need for compact family cars to offer up at least one model that can boast 40mpg to be competitive; it may be factually correct that their products will sell fine without meeting the benchmark, but it is also totally irrelevant to the evolving market dynamic. And the ongoing discussion.

To wit: Patterson and Rowling and King are standalone franchises unto themselves that do not play in the same market or by the same rules that apply to the other 99.99% of the authors and books any more than Lexus plays in the family car market. Both command premiums that put them outside the scope of the markets under discussion.